Reaching for the Skye!
Considering what I’m going to write about today, I couldn’t help going for the pun “Reaching for the Skye!”, because it’s all about Skyepharma. The following chart taken from my spread betting account at IG Index tells the story of how I bought a token £1-per-point position in early April (indicated the blue square on the blue line) when the price was bouncing along the bottom, just before the price more than doubled!
Yes, I know I should have gone in at £100-per-point rather than £1-per-point, thereby making a meaningful £4500 profit rather than a measly £45, but it could so easily have gone the other way. So does it really matter that I didn’t go for “the big one”, considering I could only have known the outcome with benefit (that few of us possess) of perfect foresight?
On the one hand a profit is a profit, and most of it is “locked in” with the stop order indicated by the red dashed line. The show ain’t over, and if the price continues its recovery, there will be opportunities to pyramid a higher stake before this stock gets back to its former glory.
On the other hand I am mindful of the advice in Max Gunther’s book “The Zurich Axioms” – that we should “always play for meaningful stakes”.
What puzzles me most is why these sudden two-bagging shares always turn up in one of my not-so-public spread betting accounts, rather than in my public trading trail portfolio. Well, it reminds me of another phrase — the one that says “a watched kettle never boils”.
Tony Loton is a private trader, and author of the book “Stop Orders” published by Harriman House.